Innovating for Failure: Government Policy and the Early British
Computer Industry These two books make important and highly
complementary contributions to our understanding of the British computer
industry. With the aid of extensive archival resources not previously
mined by historians, each documents the history of an institution that
figured prominently in the industry, and each pushes beyond the confines
of that institution to provide broad insights into the industry as a
whole. The books also share a common theme of failure. Neither the
public agency studied by John Hendry nor the private firms chronicled by
Martin Campbell-Kelly succeeded in their objectives of closing the gap
between the British computer industry and its American counterpart. The
shadow of IBM looms large over both studies. These books thus form an
important chapter in the story of British industrial decline, one which
sheds a great deal of light on the modern American economy and one of
its greatest successes.

Contrary to what the books' titles might lead one to believe,
Campbell-Kelly's study covers much the broader territory. ICL and
its antecedents hold much the same position among British computer firms
that IBM does among American companies. Its roots go back to the early
twentieth century, when the British Tabulating Machine Company (BTM)
began acting as the exclusive distributor of punched-card tabulating
machines in the United Kingdom and other English-speaking nations
outside the United States. BTM operated under license from an American
firm that eventually formed the core of IBM. In 1949 the companies
dissolved their agreement, just as the punched-card firms entered the
uncertain period of transition from electro-mechanical equipment to
electronics and computers. A decade later BTM merged with its
traditional competitor in the tabulating business, Powers-Samas, to form
International Computers and Tabulators. A period of almost continual
merger negotiations followed, involving the British government and
virtually every manufacturer of computers other than IBM, and
culminating in the formation of ICL in 1968. Far and away the largest
British producer and firmly identified with the national interest, ICL
set out to become the world's third largest producer of central
processing units, which at the time represented IBM's greatest
strength. Though unsuccessful in this endeavor, ICL continued to grow,
and today it remains "Britain's leading information systems
company."

Campbell-Kelly takes us through this history with a
straightforward, chronological account. He devotes roughly half the
book to the punched-card era, the remainder to the period since the
BTM-Powers-Samas merger. The narrative moves forward through time in
neat bundles. At the start of each, Campbell-Kelly assesses the
marketing goals of the firm, the principal obstacles to achieving them,
and the degree of success ultimately attained. For the punched-card
era, with its comparatively stable technology and business relations,
Campbell-Kelly defines the bundles according to traditional historical
periodization. Later, product innovations and mergers dictate the
breaks in the story.

Throughout this account Campbell-Kelly keeps his gaze closely on
the very highest echelons of management. His primary sources come from
the board papers of ICL, which date from the earliest years of operation
of its ancestors. These records contain financial reports, strategic
plans, and most important for Campbell-Kelly, documents relating to
mergers and other relations with firms and government institutions
outside of ICL. Campbell-Kelly has supplemented these sources with
references from the secondary literature and a few other collections of
primary materials, and for the later period he has interviewed many of
the top managers.

The result is an unusual brand of official corporate history. In
effect, Campbell-Kelly examines the history of the entire tabulating
machine and computer industry from the perspective of its leading firm.
We sit on its board and look out. Because ICL and its antecedents have
always been so prominent in that industry, because they discussed
mergers with so many firms and with government, and because
Campbell-Kelly draws so ably on the secondary literature and his own
analysis of the industry, the book provides a remarkably comprehensive
and continuous survey of the data-processing business in Britain during
this century. In this sense we get far more than we might expect from a
study of a single firm. By the same token, the book does not often
slice very deeply into the operations of BTM or ICL themselves.
Campbell-Kelly says in the preface that he hopes his study will be of
interest to students of corporate research and development. If that
proves true, it will not be because it offers the intensive examinations
of research management and development projects that have characterized
most recent studies of corporate research. Even when discussing the
issues of product innovation and market strategy that occupy most of his
attention, Campbell-Kelly must infer a great deal from formal reports
and proposals.

This book does not yield easy generalizations. It has no
introduction or conclusion, and it lacks an explicit theme. At several
points Campbell-Kelly encourages readers to draw their own conclusions.
Yet it seems safe to say that the current running through this study is
failure, and on this subject Campbell-Kelly is extraordinarily
suggestive, if not explicit, in drawing his own conclusions. His
technique, repeated at the beginning of almost every chapter, is to draw
attention to the gap between expectations and accomplishments. Usually
this involves a description of how BTM and ICL lagged behind IBM and its
competitors, both in their abilities to sell existing products and to
generate new ones in a timely fashion. Campbell-Kelly then gives ample
voice to contemporaries who sought to explain this sluggish performance
and remedy it. Since the firms seldom wanted for critics, this approach
enables Campbell-Kelly to introduce many ideas into the discussion. He
also does not hesitate to pass rather frank judgments on the performance
of individual managers. Had Campbell-Kelly probed more deeply into the
firm, he might have provided further insights (how, for instance, did
the aristocratic management of BTM contribute to the firm's
inability to develop its own manufacturing capabilities?). Had he been
more willing to generalize, his ideas would be more accessible to
students of industrial decline. But given his task of producing a
comprehensive official history, his accomplishment in providing for a
discussion of failure is a remarkable one that deserves attention from a
wide audience.

In many respects, Hendry's book is the inverse of
Campbell-Kelly's. Focusing on the public sector, Hendry
concentrates on one component of its activities regarding computers, the
policies of Lord Halsbury as director of the National Research and
Development Corporation (NRDC) from 1949 to 1959. The subject serves as
little more than a footnote in the history told by Campbell-Kelly (who,
indeed, cites Hendry's book, using the far more appropriate working
title of NRDC and the Early British Computer Industry). Although
narrowly focused, Hendry is eager to draw lessons. He makes the theme
of failure explicit, and his book's greatest assets are its
analytical introductory and concluding chapters.

As Hendry eventually makes clear, his is a story of an endeavor
that could not possibly have succeeded, because NRDC had been given a
self-defeating mission (what Hendry refers to as "terms of
reference"). It was created to address two concerns regarding
patents: that patents generated through public support of research might
unfairly enrich private parties; and that such patents might not move
quickly into productive use. To head off the first problem, NRDC would
take possession of the patents. To overcome the second, the agency
would encourage their exploitation by private parties. This second
function, of course, flew directly in the fact of the concerns about
fairness. Recognizing the conflict, the government restricted the funds
available to encourage commercial use and insisted that they be repaid,
so that NRDC would function as a self-supporting endeavor. Any
additional patents generated in the course of a project receiving
support from NRDC would pass to the government agency.

Following Lord Halsbury as he tries to entice Britain's data
processing firms into deals with such scant bait, one does not know
whether to laugh or cry. Halsbury, who made frequent trips to the
United States and closely monitored IBM's early successes in
marketing electronic calculators and computers to its traditional
business customers, became convinced that Britain's computer
industry would succeed only if one of its electronics firms merged its
technical expertise with the marketing experience of either BTM or
Powers-Samas. As Campbell-Kelly shows, such mergers eventually came to
pass, in part because of government incentives. But Halsbury lacked the
resources to force the issue, and apparently he also lacked the will or
the means to change the terms of reference, though Hendry does not raise
this possibility.

These two books ultimately converge on the same issue and the same
moment in time. Why, they ask, did Britain's computer industry
fall so far behind during the critical period from the end of the Second
World War, when British designs and installations compared quite
favorably with those of the United States, to the early 1960s, when IBM
penetrated so deeply into the market with its 1401 and System/360
machines? The solution, they make abundantly clear, consists not in
identifying a single cause that explains an otherwise inexplicable
phenomenon, but in sorting through many factors that in their abundance
make failure appear inevitable. Both Hendry and Campbell-Kelly have
concentrated their sifting efforts on the managerial aspects of the
question, and with good result. No doubt Britain's computer
industry would have performed better had BTM not brought a conservative,
aristocratic style of management to it. Poor product development
contributed further to its troubles, as did hamstrung government
programs.

Yet one senses in reading these studies that the most important
factor of all rests outside the institutions, in the marketplace, and
beyond that in the realm of culture. At critical points in each book,
we encounter what seems to be the foundation stone of the story--the
lack of enthusiasm for tabulators and computers among British consumers.
The sluggishness of the market restricted opportunities to attain scale
economies. More important, it deprived the British industry of the
primary source of vitality that drove its American counterpart. In both
the tabulating business and the critical early years of the computer
industry, consumers in the United States had a great deal of input into
the designs of the equipment. Suppliers did not just produce standard
machines. Working closely with customers, they arranged hardware and
software to perform particular services. At the onset of the Cold War,
the American government pumped huge sums into the hands of consumers,
further invigorating this process just as the electronic computer came
into being. IBM, a firm with a long tradition of placing
representatives in every corner of the market, listening to customers,
and maintaining flexible manufacturing capabilities, thrived.
Campbell-Kelly and Hendry have described with revealing insight the
largely unsuccessful efforts of British managers to create in hothouse
fashion an IBM of their own. Like those managers, they have
concentrated on issues of product design, organization, and scale, not
on the environment that had nurtured IBM's organic growth.

Steven W. Usselman is assistant professor of history at the
University of North Carolina, Charlotte. His studies of technological
innovation and corporate strategy in the American railroad industry have
appeared in the Business History Review and other journals. He is
currently completing a study of product strategy at IBM leading to the
System/360 computer.

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